The financial markets are getting a little crazy, and this could spill over into crypto and gold. August has been a wild ride so far, with traders leveraging like there’s no tomorrow, partly because the liquidity is lower than usual this month.
Add in the fact that corporations are splashing cash on share buybacks—up to $1.15 trillion this year, according to QCP Capital analysts—and you’ve got a recipe for some serious market action.
But that’s not all.
Goldman Sachs has seen record demand from clients buying the dips, which only adds fuel to the fire. As the U.S. elections get closer, this risk-on sentiment could push Bitcoin and gold prices even higher.
Traders are eyeing these assets as potential hedges, and the market could see some big moves, especially with the kind of demand we’re seeing for BTC topside calls.
Bitcoin’s election playbook: What to expect
With the U.S. elections coming up, Bitcoin is under the spotlight, and not in a good way. The Democrats are giving crypto the cold shoulder, while the Republicans are promising to put an end to what they call the “unlawful and un-American crypto crackdown.”
This political tension is reflected in the BTC skew, which favors puts as we approach the elections. There’s also a massive 6-point volatility spread between options expiring before and after the election.
Given all this, QCP Capital is suggesting a defensive strategy for Q3. They’re talking about an Amplified Range Accrual over the next 10 weeks.
But there’s a catch. If BTC steps outside that range, you lose 1% of your principal, with a max loss capped at 10% over the 10-week period. Not for the faint-hearted, but hey, this is crypto we’re talking about.
Bitcoin and the 200-Day EMA
Bitcoin’s price action has been pretty telling lately. It dipped below the 200-day Exponential Moving Average (EMA) three times this year. The first time was back on July 4, which marked a bearish close.
But don’t worry, it didn’t stay down for long. Within 10 days, Bitcoin was back above the 200-day EMA. This time, it only took less than 24 hours to bounce back, showing that bullish momentum might be creeping in again.
Long-term holders and short-term holders are playing different games here. STHs are the ones day-trading and scalping, trying to squeeze every last drop out of short-term price movements.
They’re usually retail traders or small-time investors. LTHs, on the other hand, are in it for the long haul, holding onto their Bitcoin for at least six months, and many of them are high-net-worth individuals or institutional players.
Interestingly, the long-term holders are seeing some gains. Recent data shows that the realized market cap for LTHs has gone up by $3 billion, a level not seen since December 2023.
The realized cap, by the way, is the sum of all the money that has flowed into Bitcoin, minus the losses from people selling at a loss. It’s a good indicator that money is sticking around in the market, even as we head into a potentially volatile period.
